Question

Monetary policy administered by the Fed is the principal method of softening the effects of the business cycle because _____.


there are more political complications with determining and implementing fiscal policy


the outside lag for fiscal policy is shorter than the outside lag for monetary policy


fiscal policy is not effective at easing the fluctuations of the economy


monetary policy has the shortest total delay in implementing and achieving a planned outcome

Answer 1

Monetary policy administered by the Fed is the principal method of softening the effects of the business cycle because **monetary policy has the shortest total delay in implementing and achieving a planned outcome**.

This statement highlights the relative speed and efficiency with which the Fed can adjust interest rates and influence money supply compared to fiscal policy, which often requires a more complex legislative process and longer implementation times.